Insurance cover provides protection from all possible losses. By paying a minimum amount towards premium, one should get insurance cover to not only to the life but also to the people’s valuables. Do you know that the new policy covers management problems related to property, defects in the title deeds and title transfer and so on?
IRDA has recently asked the insurance providers to launch new title insurance products to benefit real estate promoters, developers and retail property buyers. People will strive hard to fulfill their dream of having an own house. The new title policy is beneficial to them to save themselves from the financial losses likely to be caused due to management problems. To safeguard the interests of the retail buyers, every developer should acquire the title insurance, according to RERA specification.
Currently, there are two types of title insurance policies available in the country. They are: Promoter’s legal expenses (protects expenditure) policy: It covers only expenses to defend litigation when someone files petition challenging the ownership title of the project; and the allottee or individual buyer retail policy. The second policy covers the losses caused due to the defects in the ownership title of the property. The individual buyer of property or the financier is free of choose the policy at the time of handing over the property.
How does the new title policy work?
Title is described as the legal ownership of the property. The new title policy protects the legal title holder of the property from possible financial losses. Since all titles need not be genuine. The insurance provider, when a person applies for the issue of a title insurance scheme, examines whether the title is defect free or not. It issues the policy only on confirmation that there are no legal problems pertaining to the property, pendency of tax payments, legal disputes and undisclosed heirs to the property. In spite of it, if anyone challenges the title ownership, the policy will make good the financial loss due to the litigation.
The following are the benefits of the title insurance policy:
- It is approved by the RERA Act
- The property covered under the title insurance policy, when mortgaged, its value would increase. Moreover, it would be easy for the loanees to get mortgage loans
- It covers all legal expenses
- The policy is essential in the absence of an organized system to track down the property details
- The policy holders can same time and money as insurance providers extend legal support in settling the claim
- Buyers feel it safe to buy property insured under title insurance. Moreover, it enhances the property value
- The title insurance covers insurance public records and defects in surveys
Challenges in Issuance of Title Insurance
Title insurance is not a common practice in our country. Because the cost of providing it is very high. In this context, insurance companies face many challenges while issuing title insurance. They are as follows:
- The number of title related frauds in India is very high
- Title dispute resolution system is very slow
- Due diligence on the property before issuing the policy is very high
- Inspection process is very long and it takes a lot of time. Insurance company has to conduct searches in the appropriate land registers. Govt offices are needed to be visited for inquiry of property records
- There are many loopholes in the laws regarding litigations arising out of property. They lead to uncertainty
The title changes every time the property is transferred to another person. Hence there is a possibility of some errors in the transfer process. In this context, title insurance helps to resolve ownership issues, protects promoters or developers, individual buyers’ interests and from possible financial losses due to title defects. So it is better to buy it.
